Ryanair is to sue the UK government for £3.3m for losses it says it incurred because of tighter aviation security.
Passengers suffered long delays after security was tightened
Ryanair gave the government a one-week deadline to normalise the procedures introduced following the foiling of an alleged plot to bomb airliners.
Passengers are limited to taking one small piece of hand luggage, and are being subjected to frequent searches.
Ryanair boss Michael O'Leary called the measures "a shambles". The government said the airline had no legal grounds.
Dublin-based Ryanair said it would give the proceeds to charity.
"It is a shambles and a cock-up and we are giving terrorists and extremists a victory," Mr O'Leary said.
"The government has, two weeks after the events of 10 August, still failed to get UK security back to normal."
Mr O'Leary warned that the current security measures would result in delays over the Bank Holiday weekend.
The government has said it will not pay compensation or "compromise security" by easing travel restrictions until the threat level has significantly receded.
It said the 1982 Aviation Security Act gave it the power to implement measures for the safety and protection of the travelling public.
"We do not believe that Ryanair have any legal grounds," said a spokesman for the Department of Transport.
"We continue to face a serious security threat and we will not compromise security."
But Ryanair plans to use provisions within a separate law - the 2000 Transport Act - to seek compensation for losses incurred between 10 and 16 August.
After details of the alleged bomb plot emerged, the government banned passengers from taking any hand luggage onto flights leaving the UK.
The measures led to chaotic scenes at Heathrow and other leading UK airports as hundreds of flights were cancelled and thousands of passengers experienced long delays.
Ryanair says the security measures have cost it millions
Restrictions were eased slightly several days later but the measures have been fiercely criticised by Ryanair, BA and other carriers.
BA has said it is considering seeking compensation from airports operator BAA for failing to handle airport security efficiently during the emergency.
The security clampdown has been particularly problematic for Ryanair because it prefers to put as little luggage into plane holds as possible to ensure a quick turnaround of flights and thus maintain lower prices.
It has called for larger briefcases to be allowed as hand luggage and for the current policy of searching every second passenger passing through X-ray security to be relaxed.
The carrier has also claimed it is "nonsensical" to reduce hand luggage on outbound flights but not on inbound services.